CUMBERLAND – It was a solid summer for home sales, say local real estate agents, with many buyers of smaller homes getting into bidding wars and paying higher than asking prices.
But for those thinking of selling their home into this “seller’s market,” they shouldn’t get too excited, say agents. Prices are merely firming up – finally. The go-go days of a decade ago are not coming back, as lenders are more cautious today. Also, the latest year-over-year sales comparisons by the R.I. Association of Realtors back the assertion that home values are improving, but not skyrocketing.
Here are some median home price comparisons for northern Rhode Island, courtesy of the R.I Association of Realtors, for the second quarter, which ended June 30, vs. June 30, 2016:
• Lincoln: +10.9 percent
• Cumberland: -6.5 percent
• Woonsocket: +13.6 percent
• North Smithfield: -2.4 percent
• Pawtucket: +13.1 percent
• North Providence: +5.1 percent
• Smithfield: +12 percent
• Scituate: +37.4 percent
• Glocester: +7.9 percent
• Foster: -2.4 percent.
(Median price changes tend to be volatile, and more accurately reflect a trend when measured over longer periods of time. A few very high priced – or very low priced – homes may throw averages off.)
“You may offer over (the) asking price,” says Brendan Duckworth, a Realtor with the Keller-Williams office in Cumberland, “but at the end of the day, it must appraise for what the lender feels is a fair price.” In other words, if a buyer bids too high, the bank or credit union may not be willing to provide the mortgage. “Buyers might be happy to pay, but bankers won’t lend the difference,” says Duckworth.
“Banks are paying more attention this time,” echoes Scott McGee, a Realtor and associate with RE/MAX Properties in Smithfield.
So where is the strength in the market? Local agents agree, it’s in the smaller homes that are drawing out first-time buyers. Young buyers were “nervous before,” says McGee, but are finally arriving, attracted by continued low mortgage rates. “The best offers are coming in the low-price to $350,000 market,” says McGee. “A few appraisals have been shot down by $20,000 to $24,000, especially in condos,” he says. “Pricing a corner (condominium) unit too aggressively doesn’t work with the banks,” says McGee. “It (the corner) might be worth $8,000 more, but not $20,000.”
Last week, the Rhode Island Association of Realtors announced that median home prices, year-over-year for August, were up 6.1 percent – to $260,000 on average – but the inventory of homes was down to only 4.2 months. (A balanced market has a six-month supply of homes.) This shortfall has more buyers looking at fewer homes and pushing prices up.
“While sales activity has been up and down following last year’s record-breaking year, prices have been consistently on the rise. The year-over-year median sales price has risen every month since February, hitting levels that we haven’t seen since 2007,” said Brenda L. Marchwicki, president of the Rhode Island Association of Realtors in a press release.
Duckworth tells of the time last spring when he sold a small Cumberland Hill home. As he was picking up his sign, a neighbor asked how much the home had sold for. Learning the price – and that it sold for $11,000 above asking price – the surprised homeowner put his own home on the market and sold it soon after.
“It has been a strong summer,” says Duckworth.
Young buyers are much different today than in the past. Joe Luca is president-elect of the R.I. Association of Realtors, with RE/MAX Preferred in North Providence. He’s also a Cumberland resident. Says Luca, “The number one thing young millennials, age 24 to 35, are looking for is a move-in ready home. They want to walk in, drop the luggage, and start living.” Generally, he says, “they are fiscally wise, and both work.” They have no time or inclination to tackle home improvements, he said. “They would rather just move in and create memories,” says Luca.
Another thing different than in the past, says McGee, is that he is noting a much stronger move to home rentals by young people. “Investors are buying good homes now, with cash,” says McGee. “Many young people today have a low desire to own a home. They want a rental that’s move-in ready, and prefer dinner and drinks over a mortgage.”
Duckworth agrees. “There will always be buyers,” he says, “but many young people are beginning to rent homes.” He adds, “People move and change jobs more today, too. As renters, they can easily leave.”
Carol LaMontagne, broker/owner of LaMontagne Real Estate in Lincoln, reports smaller, lower priced homes are appreciating the fastest.
“There is a definite shortage in Lincoln” of smaller homes, she says, and “there were a few bidding wars when prices were too low.” She notes that “the $400,000 to $600,000 area is a nice price range” across the area, and prices, while not escalating, are more firm today. With homes valued at more than $500,000, “there are no bidding wars, though the market is solid,” LaMontagne reports.
LaMontagne is happy to see there are finally more buyers around today. “I saw a listing in Central Falls for $280,000 the other day. Do you know how long it’s been since we’ve seen that?” she asked. “There were a lot of years of bad stuff,” she said, “but now I’m seeing Mass. plates coming back in.” In past strong housing markets, Bay State buyers forced out of suburban Boston by high prices have come to Rhode Island, willing to endure longer commutes for more affordable homes. LaMontagne now thinks it’s happening again.
So why are prices firming for smaller homes? First, there is a shortage of those homes for sale, according to Realtors. Second, there is pent-up demand from young adults who delayed ownership after the recession. Third, there is little home construction going on, and many owners of smaller homes don’t want to move. Finally, there are also baby boomers, older adults downsizing and competing with millennials for smaller homes.
LaMontagne agrees with McGee on condominium prices. The above-asking-price offers generally do not apply to condominiums. LaMontagne reports multi-family home prices have been strong, however.
How to sell
So what should a homeowner do when thinking about selling? On that, all four pros agree: Contact a real estate agent and have them stop in for a market analysis, even if it’s months before you plan on putting your home on the market. Get an idea of a fair – and not inflated – value.
“Talk to a Realtor now, and they will tell you what to do to prepare for a sale,” says Luca. “Cull out the trinkets, the ‘tchotchkes.’ Do the basic landscaping a homeowner can do so the house looks good to those driving by. It takes time, so get started.”
McGee agrees, and adds, “de-clutter your home, throw stuff out. Make it easy for visitors to move around. What is selling now are open concepts, hardwood floors and granite countertops.”
LaMontagne says your home needs to be “presentation ready.”
“Today’s sellers are competing against newer homes, and buyers are very busy. They don’t want to move in and be faced with a lot of work,” she said.
Claims Duckworth, “People will pay a premium for a house that’s already fixed up. There is no bad time for a Realtor to give owners a market analysis. Owners just need to get some ideas, set a game plan, and get to work.”
Adds McGee, “There is no slow time in home sales, but it does get a bit less busy between Christmas and Valentine’s Day.”
All agree, there’s no need for a seller to wait until next spring. The buyers are out there today.